Gender Gap

Women Who Run Tech Startups Are Catching Up

Women-led private technology companies are more capital-efficient, achieve 35 percent higher return on investment, and, when venture-backed, bring in 12 percent higher revenue than male-owned tech companies. That’s according to new research presented at a recent conference in San Francisco organized by Women 2.0, a media company devoted to women founders in the tech industry. It indicates female entrepreneurs, who have traditionally lagged behind their male counterparts, are catching up, at least by some measures.

Led by Vivek Wadhwa, who holds titles at Stanford and Duke universities, and Lesa Mitchell, a vice president at the Kauffman Foundation, the report “Women in Technology: Evolving, Ready to Save the World” draws on responses to an online survey from 500 women in the tech sector (inside and outside the U.S.) and is scheduled to be published this spring.

It shows that the average age of women entrepreneurs founding tech companies has dropped, from 41 to 32, since an earlier, smaller study was done in 2009, and the percentage who have had graduate-level education has risen, from 40 percent to 56 percent. The findings about women’s contributions to success bolster previous research from several sources, including a Credit Suisse Research Institute (CS)report and Dow Jones VentureSource (NWS)analysis.

At the event, Wadhwa pointed out gender and racial disparities in Silicon Valley, noting that women now earn more than 50 percent of all bachelor’s and master’s degrees and nearly half of all doctorate-level degrees. Yet they start only 3 percent of technology companies and are almost absent on management teams, outside of legal and marketing positions.

He drew raucous applause from the nearly 1,000, 21- to 45-year-old women (and a handful of men) in the audience. His findings, including that 33 percent of female tech entrepreneurs reported facing “dismissive attitudes” from their colleagues and 15 percent said their abilities had been questioned, came in a presentation in which he decried the “arrogant young brats”—male, of course—getting venture capital funding for “silly social media apps” from investors who hope they will emerge as the “next Mark Zuckerberg.”

Photograph by Erica Kawamoto HsuWomen 2.0 PITCH winner Lesley Marincola of Angaza DesignIn contrast, he encouraged female founders to set their sights on bigger, international problems such as improving health care, delivering clean water, and harnessing Internet data to improve education and lift people out of poverty. The winner of the pitch contest held at the Women 2.0 event, Lesley Marincola, runs Angaza Design, a Palo Alto (Calif.) solar energy company that distributes room-scale solar power systems in Africa.

Wadhwa’s data, which he says he’s still refining and hopes to use as part of a crowdsourced book, follow on a January 2013 study analyzing U.S. Census data on women-owned businesses with more than $10 million in revenue. The study (PDF), commissioned by American Express OPEN (AXP), shows that growth in women-owned businesses with more than $10 million in revenue is 47 percent higher than among all companies with revenue of $10 million and up.

The robust growth of these 12,700 majority women-owned companies (out of about 200,000 total, including the country’s largest private companies and publicly traded brands) surprised the study’s author, researcher Julie Weeks. “This has been happening under our noses, but because the data had not been specifically studied before, we didn’t know it,” she says. She hopes to delve further into what these women are doing right, particularly since the vast majority of women-owned businesses—98 percent—stay under the $1 million annual revenue threshold.

One factor Weeks and Wadhwa suspect is boosting women’s business success is increasing support from peers. “We’re seeing that women who are at this level can now get some of the specialized tips and strategies they need to succeed in this rarefied atmosphere. The more they can hang out and share challenges, the better they all get at it,” Weeks says.

Wadhwa’s data show that more than 80 percent of female tech entrepreneurs reported having mentors, most with both men and women acting in that role. Of those who said they had women mentors, 45 percent reported they were “very helpful.”